Interview with Trader: Jordi Visser. Long Term Interest Rates Have to Go Higher.

After seeing Friday's blog entry, my friend, hedge fund portfolio manager at George Weiss and ex coworker from Morgan Stanley (Sao Paolo and New York) sent me the following information: “Comparison of the 1994-1995 tightening to the 2004-2006 tightening (today): These are numbers counted from the close of the month prior to the first tightening and the final one (assuming this is the final) then today.

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Wal-Mart Raises Wages: Good Public Relations or Good Business?

Wal-Mart implements "pay increases" for associates from Wal-Mart Website. I don't know why Wal-Mart would make this a press release except that it is a nice Public Relations move against their ongoing bad press around labor practices. I'm sure they are trying to stave off the kind of big box minimum wage increases that the Chicago City Council aimed right at them. It should be interesting to see if this works. As a shareholder, I think that paying employees more means better quality workers and better local relations. I hope this is more than just.

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3M (MMM) Earnings Makes This Best of Breed Stock a Bargain

Had to buy more 3M (MMM). I am not at a totally full position. Sure it might go down more at year end as we get some tax loss selling but I have to go to full position on such a good company at just 14 times next years' earnings and 12 times 2008 earnings. The stock was sold of recently as the company lowered guidance because of weaker than expected LCD sales. But people are still switching over to LCD TVs and getting rid of those tubes. This still bodes well.

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Fed Pauses then Traders Will Focus on Inflation

Longer Term US treasuries all yield below 5%; the yield curve is inverted. Both of these are signs that inflation is expected to decline. However, I see signs of inflation all over the place. Congress still talking about increasing the minimum wage, municipalities and states are raising the local minimum wages, gasoline prices are not showing signs of declining. Emerging market demand for commodities is still growing. CPI numbers are still high. Employment is not falling apart. I think the Fed will pause raising interest rates at the coming meeting.

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Doggies Suffer While Gas Spikes

Hot Weather, people run those airconditioners. As I predicted, natural gas spikes up to $8.00. I sold out 1/3 of the contracts I had accumulated at an average price around $6.50. I want to be out of these positions while the weather is still hot. I also want to hold a little position just in case another hurricane drives prices back to $15.00 / mmBTU.Disclosure:I am long September Natural Gas Contracts Traded Disclaimer:Nothing in this blog is meant to be specific financial advice or a recommendation to buy or sell.

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How Come You Never Get Jealous? On Human Evolution

Yes, I knew too many of these back in my day on Wall Street and the City in London. I think I was one of these. Thankfully, people evolve.

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Another Place I do Financial Research: History and Use of Wikipedia

I recommend reading the New Yorker article by Stacy Stacy Schiff on Wikipedia. I think this provides the best history and background for how Wikipedia got going and what it is that I have seen. I find myself using Wikipedia often to research even financial topics. I also use it in my blog and emails to refer non-financial readers to explanations for various financial terms and instruments. I always check the Wikipedia entry and find them to be almost universally thoughough and accurate on financial terms.

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Central Vermont Public Service (CV): Liquidating Position.

Part of the discipline of managing a portfolio is to constantly be looking for positions to sell. The best way to do this is to choose the position with the least upside or the one that you worry about losing money in. As part of my weekly pruning of stocks I liquidated my entire position in Central Vermont Public Service (CV). This is a utility in a low growth area trading at a p/e of 18 and with a dividend yield of just 4%. I bought the stock last fall on a day with loud news.

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Stoneridge Inc: A Nice Stock to Trade Around

Stoneridge Inc (SRI) a small autopart manufacturer is one of several small stocks I like to trade around. The company is not in a very good business but has great management. That is my favorite profile for a stock to trade around. Today the company annouced great earnings and positive forcasts. The stock is up 20%. I'm selling some of my holdings above $10. I usually buy when the stock tanks on some other terrible news. I own and trade SRI. Today's sale was of 1/3 of my position.

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GDP Report Rallies Bonds but Ignores Inflation; Short and Hurting

The yield on the ten year US treasury bond is back under 5%. I went back to my maximum short (bet that rates would rise) when rates hit 5.05%. What do I do now? I thought of buying back my futures and cutting my losses - but that is what everyone else is doing. Also, I really wish I could sell more here, but to do that would violate my rules on size in any one bet. Instead, I bought out of the money call options. Bond volatility (and thus options) seems cheap relative .

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